What to Expect in the Cryptocurrency Markets After Covid-19 is Mitigated
One year into the pandemic, the crypto market appears to have boomed. When the pandemic occurred, Bitcoin – the world’s first cryptocurrency – could be bought for about $7,300. A couple of days back, the token cost over 55 000 dollars, a 653% increase, with similar surges in other leading cryptocurrencies (e.g., Ether).
During the pandemic, many things came together that helped Bitcoin and cryptocurrencies, in general, out quite a bit. The stock market volatility drove many people to buy Bitcoin to store their money as they waited to see what would happen. Many did not do so as an investment, but the value increased so much that they took a tidy profit.
This article will give you an insight into how the crypto market will look after the covid crisis.
Supply and Demand
The old law of supply and demand is one of the leading causes of Bitcoins’ value’s current increase. Unlike paper currencies, which governments can manipulate simply by printing more bills, there are at least 21 million Bitcoins. When all these coins are created or “mined,” it is no longer possible to create more.
There are 18.5 million Bitcoins present, while more are steadily being mined at a lower daily rate. Bitcoin is growing in popularity as a payment method, and its perceived potential as a vehicle of investment is rising. Hence, demand for the small number of existing Bitcoins will increase the value of each coin as buyers and trade investors struggle to put it into action.
Cryptocurrencies Going Mainstream
Recent market peaks hit by Bitcoin, Ethereum, and other significant cryptocurrencies have dramatically raised the interest rate in this 10-year-old digital currency category. Businesses, financial firms, and retail consumers are increasingly adopting Bitcoin and several other leading cryptocurrencies.
The thirst for adoption is partly supported by the revived coverage in the mainstream media and reports of significant purchases by hedge funds. Hence, many analysts agree that higher-profile cryptocurrencies in the coming few years are on the verge of an explosion in popularity and value.
The first important factor that increases the value of Bitcoins is their increasing popularity as a payment method, especially among younger consumers. Cryptocurrencies initially followed cell phone adoption, online shopping, touchless payments, and other technological and behavioral evolutions, supported by a small fraction of early adopters. These developments slowly began until they reached a stage of inflection and exponential expansion.
- Cryptocurrencies’ protection and privacy often contribute to the growth of customer adoption, as increasingly shoppers realize that marketers flood them with advertisements following “traditional” online payments that are failing to track their transactions. An advantage of cryptocurrencies, in general, is portability.
Consumers can use it to pay for items anywhere in the world without any change. We can see the world get even smaller in the post-Covid 19 worlds as people work and function remotely. People move to places where living costs are lower and more dependent on cryptocurrency than on the depreciated local currency.
Bitcoin and other cryptocurrencies are becoming increasingly common and used, which means that the need for crypto services is increased. One reason why BNY Mellon first offered digital asset services was the growing client demand for digital assets.
In addition to this, BTC is also prominent amongst companies’ founders, such as Elon Musk (Tesla) and Micheal Saylor (Microstrategy), who believe in cryptocurrency and started investing in it through their companies. It also prompted other conventional financial firms to provide crypto-related services, such as Paypal, Mastercard, etc.
Institutions can diversify investments through Bitcoin and Cryptocurrencies. Indeed, Bitcoin is not correlated with other assets and enables institutions to diversify their investments, primarily of highly correlated assets. Furthermore, BTC and cryptos are highly stable, borderless, and can offer new possibilities in conventional finance.
Commercial banks like JPMorgan, Guggenheim, financier Paul Tudor Jones and insurance company MassMutual have already put hundreds of dollars into bitcoin’s future. Enterprise companies will continue to follow the lead, with a small proportion of the crypto-denominated reserves being included in most corporate balance sheets.
More Talk on Crypto Regulation
More regulation is bound following the pandemic and more individuals adopting cryptocurrencies. The 2020 Crypto-Money Act, which launched the new year with the latest energy industry and focussed on crypto legislation and regulation, was established. Additional bills are underway or adopted, and the legislative activity around the space should increase this year. That doesn’t mean that new laws are passed.
The legislative champions of crypto will focus mainly on educating their colleagues and informing them through draft bills. While there is increased talk about crypto-regulation, it will take years to create reasonable regulations, given the potential effect of crypto on markets. Experts don’t know how the legislation would look, but perhaps the way the SEC treats conventional currencies would vary.
Although it does not seem unreasonable to compel the sector to wait for regulators to clarify the regulations, the best ways to clean up technology’s image are updating standards and modifying current legislation to cover cryptocurrency.
Cryptocurrencies are still in their early stage. This fact means that their price is uncertain in the future. Even after developing fiat currencies years ago, cryptocurrencies are still the most exciting and promising development in finance. It has stirred not only the imagination of the billionaires but the public in general eager to find an alternative to precious metals and fiat currencies.
However, the value and popularity of cryptocurrencies are expected to rise as the world advances and battles against the pandemic. There are many more yet to be imagined in the future, from the regular payments of Starbucks and everyday coffee to more advanced applications. Crypto has provided its users a fantastic first layer of the financial canvas.